Review: Pave Inc. ready to provide loans to younger borrowers

Pave Inc. is a New York City-based personal loan service, dedicated to providing access to funding for younger borrowers.

Application process

Applicants need to provide much of the same information that a standard bank requests: identification, proof of citizenship, pay stubs (if possible), bank statements, and, for students, copy of admission letter.

There are a few minimum requirements to qualify for funding. Borrowers must:

Be a U.S. citizen

Be at least 18 years old

Have a U.S. bank account

A credit score of at least 660

Prove they have income, a job offer, or plans to attend an educational course

If a borrower meets the minimum requirements, Pave contacts the credit bureaus to verify their information.

Applicants who are denied have the option of re-applying as frequently as they’d like. Pave.com recommends waiting at least 30 days, since credit bureaus generally take that long to show changes on an account.

Lending terms

Applicants can seek loans of $3,000 to $25,000 through Pave. Lending terms depend on many factors, although the lack of a maximum debt-to-income ratio is a notable feature.

As of December, 2015, Pave was offering loans with 2- or 3-year repayment schedules. Longer terms were not yet available, but could be coming in the future.

Students who borrow to pay for a course may defer up to three payments on their loan, but interest will continue to accrue during deferment.

Rates span a broad spectrum. Annual percentage rates (APRs) begin around 6 percent and go up to 35 percent, although the company maintains a lot of flexibility and doesn’t make it easy to find anything other than “your” rate.

The website has a carefully crafted FAQ titled “How is Pave able to offer low rates,” but rates aren’t guaranteed to be better than those offered by other marketplace lenders.

Loan funding

Loan funds come from accredited investors — individuals with at least $200,000 a year in income, or $1 million in net worth. Investors can sign up through the website and fill out a portfolio, indicating what kinds of projects and borrowers interest them.

As of December, 2015, Pave was not able to offer loans in Arizona, Connecticut, Washington D.C., Maine, Massachusetts, Nebraska, Nevada, New Jersey, North Carolina, North Dakota, Oregon, Pennsylvania, Tennessee, Vermont, Wisconsin and Wyoming.

Marketplace lenders typically partner with an FDIC-insured depository institution to make loans across state lines. New Jersey-based Cross River Bank makes all of Pave’s loans, with Pave collecting payments.

One bad experience was linked to the New York pilot program, and frustration that the service wasn’t yet available in the applicant’s state. The other negative Credit Karma review focused on a lengthy and intrusive application process. All four positive reviews were short, anonymous, and lacking in detail.

The company was not accredited with the Better Business Bureau of Metropolitan New York as of December, 2015.

Is Pave a good choice?

Pave is a unique service and it presents an alternative to traditional financing formats. It’s still a young platform that will probably continue to evolve.

Pave’s services are innovative and, for the right young borrower, provide an excellent financing option. APRs for riskier borrowers can be high.

The website’s Future Income Estimator is a nice feature, and it’s indicative of the company’s focus on potential future income rather than current income. However, borrowers could get themselves into trouble if they fail to realize the income their expecting after they take out their loan.